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Want to avoid another Depression? Try understanding the first one.

By Robert S. McElvaine
the Washington Post /published July 10th,2011

“I have seen the future, and it works,” journalist Lincoln Steffens famously said of his 1919 visit to Bolshevik Russia. Guided by his economic faith, Steffens saw the future as he wanted it to be, not as it would be.

What excuse do we have when we follow people who, guided by a different economic faith, see the past as they want it to have been, not as it was? Today, under the influence of leaders blinded to facts by certain faith, we are careening toward a repetition of mistakes that led to catastrophe.

A CNN poll conducted in June found that almost half of Americans now think that another Great Depression is “very likely” or “somewhat likely” to occur within the next 12 months.

There is a genuine danger that the already weak economy could turn into a second coming of the hard times of the 1930s. The focus of many politicians today on cutting spending and avoiding tax increases on the wealthy is based on a misunderstanding of what led to and extended the Great Depression — and it is setting us up for a new collapse.

Most people realize that a failure to raise the debt ceiling could be catastrophic. But the drastic cuts in federal spending that some Republicans are demanding in exchange for an increase in the debt ceiling would be a repeat of the mistakes that prevented a full recovery in the 1930s and then caused a secondary collapse in 1937.

With the economy in a precarious position, slashing spending, concentrating ever more wealth and income at the top, and blocking effective regulation is a
prescription for disaster.

In fact, the first part of this prescription is very similar to one written by Dr. New Deal himself. Fearful of massive budget deficits, President Franklin Roosevelt cut back on spending as soon as his 1936 re-election was secured, plunging the economy into a renewed free fall that introduced the word “recession” into our lexicon so as to avoid calling the collapse a renewed depression.

Yet that is the course upon which a unified Republican Party is insisting. For their part, President Barack Obama and many Democrats have ceded the battlefield and are just trying to reduce the number of casualties.

Conservatives appear to be united behind a set of beliefs that are dangerously wrong. Theirs is a faith-based economics that contrasts with fact-based economics; their god is named the Market. Their economics is as immune to facts as its opposite, Marxism. Call it Marketism. A devout Marketist believes that the Market is always right and any government intervention is, well, sinful.

For more than two generations, the Great Depression discredited this religion. But beginning around 1980, with the election of Ronald Reagan, the Marketists staged a revival.

One of my students brilliantly, if accidentally, captured the essence of this economic fundamentalism in a journal entry a few years ago: “During his presidency, Reagan implemented sloppy-side economics.” It is that sloppy-side economics that conservatives have been pushing ever since, and the more it fails, the harder they push it.

During the Great Depression, Roosevelt called for “bold, persistent experimentation” and said: “It is common sense to take a method and try it; if it fails, admit it frankly and try another. But above all, try something.”

But the position of faithful Marketists, then and now, is this: Take their method and try it. If it fails, deny its failure and try it again, and again, and again. But above all, keep trying the same thing.

Since the beginning of the Obama administration, Republicans have been working unstintingly to misread the history of the Depression and implement policies similar to those that led to the collapses of 1929 and 2008. “One of the good things about reading history is you learn a good deal,” Senate Minority Leader Mitch McConnell, R-Ky., declared early in 2009. “And we know for sure that the big spending programs of the New Deal did not work. In 1940, unemployment was still 15 percent. And it’s widely agreed among economists that what got us out of the doldrums that we were in during the Depression was the beginning of World War II.”

Well, yes — but that fact demonstrates just the opposite of what Marketist fundamentalists argue.

It is plain that the reason the New Deal failed to end the Depression is not that Roosevelt and Congress overspent, but that they underspent. The New Deal was not too reckless in its spending; it was too cautious. The war ended the Depression precisely because it obliged Roosevelt and Congress to spend greater and greater amounts without worrying about where the money was coming from.

The basic reason that the Obama administration has not yet ended the economic disaster it inherited is the same reason that prevented the New Deal from ending the Depression FDR inherited: It hasn’t spent enough. The 2009 stimulus staved off a
second Great Depression, but it should have been much larger to produce a genuine recovery. Subsequently, even with majorities in both houses, the Democrats let the GOP define the argument and failed to force through needed programs to get the economy back on its feet.

It has been the alleged “socialism” of the New Deal that has prevented another Depression for seven decades. While a market-based economy is clearly the best system, it carries serious risks. Government intervention minimizes those risks for businesses and for people — just a spoonful of “socialism” helps the capitalism go up.

“History doesn’t repeat itself, but it rhymes,” Mark Twain is said to have remarked. To the extent that our current history sounds like the 1930s, it is because of the lack of sense on the part of politicians. We know better than to slash spending and allow the rich to become even richer in a weak economy, but we’re set on doing it anyway.

If there is a new Great Depression, it won’t be without rhyme, but it will be without reason.

Robert S. McElvaine, a professor of history at Millsaps College, is the author of The Great Depression: America, 1929-1941.”

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Filed under Bolsheviks, capitalism, CNN, Conservatives, Franklin D. Roosevelt, Great Depression, great recession, Marketism, marxism, repeating history, Ronald Reagan, socialism

>Distort, Attack, Repeat: The Fox Propaganda Machine in Action

>If your of the belief that Fox News is nothing more than a propaganda machine for the Republican Party, you’ll be interested in watching a hour by hour slide show that takes you through a typical day on the “Fixed” news network of relentless “Obama bashing”.

The feature can be found over at Rolling Stone’s website and accompanies a story about how Fox News Chairman Roger Ailes created the most profitable propaganda machine in history.

Ailes runs the most profitable – and therefore least accountable – head of the News Corp. hydra. Fox News reaped an estimated profit of $816 million last year – nearly a fifth of Murdoch’s global haul. The cable channel’s earnings rivaled those of News Corp.’s entire film division, which includes 20th Century Fox, and helped offset a slump at Murdoch’s beloved newspapers unit, which took a $3 billion write-down after acquiring The Wall Street Journal. With its bare-bones news gathering operation – Fox News has one-third the staff and 30 fewer bureaus than CNN – Ailes generates profit margins above 50 percent. Nearly half comes from advertising, and the rest is dues from cable companies. Fox News now reaches 100 million households, attracting more viewers than all other cable-news outlets combined, and Ailes aims for his network to “throw off a billion in profits.”

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Filed under CNN, Fox News, President Obama, Roger Ailes, Rolling Stone, Rupert Murdoch, slide show

>Dear President Obama: More of this, please

>This piece of video is the best that I’ve heard coming from President Obama in a very long time. If he continues this type of offensive against the Republican “Party of No” Democratic prospects come November will be much improved.

This video is from the website Crooks and Liars

http://embed.crooksandliars.com/v/MTgwNTctMzk2MTg?color=C93033

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Filed under CNN, Crooks and Liars, Labor Day, Milwaukee, President Obama

Poll: Bush still blamed for economy

From CNN Ticker Producer Alexander Mooney

More Americans blame the Bush administration for the nation’s economic troubles than the Obama administration, according to a new poll.

(CNN) – More than a year after President George W. Bush left office, more Americans continue to blame his administration over any other entity for the nation’s economic woes, according to a new poll.

In a New York Times/CBS News survey out Friday, 31 percent of Americans said the Bush administration is at fault for the current state of the economy while only 7 percent pointed their finger at President Obama and his team.

An additional 23 percent said the fault lies with Wall Street institutions while 13 percent assign the blame to Congress. Nearly 10 percent said the blame lies with all of them.

In a CNN/Opinion Research poll released last November, the public appeared split on who should be blamed if economic conditions don’t approve: 47 percent said Bush and congressional Republicans while 45 percent said Obama and congressional Democrats.

“The public still tends to blame the Republicans for current economic conditions,” said CNN Polling Director Keating Holland. “But looking forward is another matter. Americans think the GOP is responsible for getting us into this mess, but they think both parties are responsible for getting us out of it.”

The poll, conducted February 5-10, interviewed 1,084 Americans and carries a sampling error of plus or minus 3 percentage points.

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Filed under CBS News, CNN, opinion poll, President Bush, Republicans, The New York Times

Commentary: GOP’s "small government" talk is hollow

By Julian E. Zelizer
Special to CNN

note: Julian E. Zelizer is a professor of history and public affairs at Princeton University’s Woodrow Wilson School. His new book, “Arsenal of Democracy: The Politics of National Security — From World War II to the War on Terrorism,” will be published this fall by Basic Books. Zelizer writes widely on current events.

PRINCETON, New Jersey (CNN) — As the budget debate heats up, Republicans are warning of socialism in the White House and claiming that Democrats are rushing back to their dangerous tonic of big government.

Speaking to the Conservative Political Action Conference, Rush Limbaugh warned that “the future is not Big Government. Self-serving politicians. Powerful bureaucrats. This has been tried, tested throughout history. The result has always been disaster.”

On CNN, former Vice President Dick Cheney said he is worried that the administration is using the current economic conditions to “justify” a “massive expansion” in the government.

After the past eight years in American politics, it is impossible to reconcile current promises by conservatives for small government with the historical record of President Bush’s administration. Most experts on the left and right can find one issue upon which to agree: The federal government expanded significantly after 2001 when George W. Bush was in the White House.

The growth did not just take place with national security spending but with domestic programs as well. Even as the administration fought to reduce the cost of certain programs by preventing cost-of-living increases in benefits, in many other areas of policy — such as Medicare prescription drug benefits, federal education standards and agricultural subsidies — the federal government expanded by leaps and bounds. And then there are the costs of Afghanistan and Iraq.

Federal spending stood at about $1.9 trillion in 2000, when Democrat Bill Clinton ended his presidency. In his final year in office, Bush proposed to spend $3.1 trillion for fiscal year 2009. President Obama’s budget proposal for fiscal 2010 is $3.6 trillion.

Nor can Republicans blame a Democratic Congress for being responsible for these trends. Much of the expansion took place between 2002 and 2006, when Republicans controlled both Congress and the White House. The Weekly Standard’s Fred Barnes was writing about “big government conservatism” back in 2003.

Two years later, the right-wing CATO Institute published a report noting that total government spending had grown by 33 percent in President Bush’s first term, lamenting that “President Bush has presided over the largest overall increase in inflation-adjusted federal spending since Lyndon B. Johnson.”

There were some areas where Bush backed off government cuts because programs were too popular, like Social Security. In other areas, like federal education policy and prescription drug benefits, the president seemed enthusiastic about bigger government.

Bush and Cheney also embraced a vision of presidential power that revolved around a largely unregulated and centralized executive branch with massive authority over the citizenry. This was a far cry from the days of Ohio Sen. Robert Taft, a Republican who constantly warned about the dangers of presidential power to America’s liberties.

After the 2008 election, Cheney was not apologetic. He explained that “the president believes, I believe very deeply, in a strong executive, and I think that’s essential in this day and age. And I think the Obama administration is not likely to cede that authority back to the Congress. I think they’ll find that given a challenge they face, they’ll need all the authority they can muster.”

Importantly, the marriage between conservatism and a robust federal government was not unique to the Bush presidency. The roots of Bush’s comfort with government can be traced to the Republican Right in the 1950s, members of Congress who called for an aggressive response to domestic and international communism.

Presidents Dwight Eisenhower and Richard Nixon were two Republicans who pragmatically accepted that Americans had come to expect that the federal government would protect against certain risks and that trying to reverse politics to the pre-New Deal period would be politically suicidal.

“Should any political party,” Eisenhower said, “attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history.”

When Nixon and congressional Republicans battled with Democrats over Social Security between 1970 and 1972, the debate revolved over how much to expand the program. Congressional Democrats wanted to increase benefits through the legislative process, while Nixon wanted to index benefits so they automatically increased with inflation.

Nixon and Congress did both.

President Reagan backed off his most ambitious efforts to cut government, most dramatically when he abandoned his proposal to curtail Social Security after facing a fierce backlash, while the military budget boomed. President George H.W. Bush signed the Americans with Disabilities Act in 1990, which was one of the boldest regulatory expansions of government since the civil rights laws of the 1960s.

All of these presidents, particularly Nixon and Reagan, likewise promoted a muscular vision of presidential power that strengthened the authority of government and introduced concepts, such as the unitary executive, which would become the intellectual underpinning of the Bush administration.

“When the president does it, that means that it is not illegal,” Nixon told David Frost in 1977. Like it or not, strengthening the presidency is one of the most important ways in which the role of government has grown since the nation’s founding.

Fifty years of American history have shown that even the party that traditionally advocates small government on the campaign trail opts for big government when it gets into power. The rhetoric of small government has helped Republicans attract some support in the past, but it is hard to take such rhetoric seriously given the historical record — and it is a now a question whether this rhetoric is even appealing since many Americans want government to help them cope with the current crisis.

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Filed under CATO Institute, CNN, Congressional Democrats, Dick Cheney, Julian E. Zelizer, New Jersey, Princton University, Rus Limbaugh, small government, Social Security, the GOP

Obama Plans Media Blitz

President Obama will give sit-down interviews with all the major networks today, according to Hollywood Reporter.

“Obama will talk separately with the anchors of ABC, CBS, NBC, CNN and Fox News Channel at the Oval Office on Tuesday. The networks will air their interviews over the course of the afternoon and the early evening.”

Obama is expected to make the case for his economic stimulus package.

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Filed under ABC News, CBS News, CNN, Fox News, Hollywood Reporter, Media Blitz, NBC News, political wire, President Obama, the Oval Office, the White House

>Obama Plans Media Blitz

>

President Obama will give sit-down interviews with all the major networks today, according to Hollywood Reporter.

“Obama will talk separately with the anchors of ABC, CBS, NBC, CNN and Fox News Channel at the Oval Office on Tuesday. The networks will air their interviews over the course of the afternoon and the early evening.”

Obama is expected to make the case for his economic stimulus package.

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Filed under ABC News, CBS News, CNN, Fox News, Hollywood Reporter, Media Blitz, NBC News, political wire, President Obama, the Oval Office, the White House